Buffett Builds $10.7B Stake In IBM

14 November, 2011

Warren Buffett said his Berkshire Hathaway Inc has accumulated a 5.5 percent stake in IBM, the billionaire investor’s biggest bet in the technology field he has historically shunned.

Buffett, in a CNBC interview on Monday, said he had bought about 64 million shares of IBM at a cost of $10.7 billion. Berkshire started buying the shares in March, with a goal of building a $10 billion position, he said.

Buffett said IBM did not know that he was building a stake and that the company was finding out about his investment for the first time as he disclosed it on CNBC.

IBM spokesmen were not immediately available to comment.

The legendary investor said he has always looked at IBM’s annual report — his preferred method of identifying companies to invest in — but this year “I read it through a different lens.”

Buffett said follow-on conversations with various technology executives throughout the Berkshire conglomerate convinced him to start building the stake.

Berkshire is due to make a quarterly report of its equity holdings on Monday night.

According to Thomson Reuters data, a 5.5 percent position in IBM would tie Buffett with State Street Global Advisors for the largest stake in the company.

IBM shares rose nearly 1 percent in premarket trading. Since early March, when Buffett started building his position, IBM shares are up about 17 percent, against a 3 percent decline for the S&P 500.

One place where Buffett is not investing is European banks.

Buffett, who put $5 billion into Bank of America Corp earlier this year, comes up whenever there is talk of a large European bank needing to raise capital, particularly in the current environment of writedowns on sovereign debt.

But he told CNBC that he would need to understand European banks better before investing in them, and that he has not yet seen an investment opportunity there in which he wants to take part.

The “Oracle of Omaha” and Berkshire Hathaway chief executive said he expects Europe’s economy to show improvement 10 years from now, but getting there will be difficult.

 


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Buffett Builds $10.7B Stake In IBM

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